Published Thursday, March 11, 2010 @ 2:40 pm

Currently unemployed and getting unemployment benefits?
Then, this message is for you.

In this horrible economy, there is no guarantee that you will get another job or…even if you do…when.

And…those life-saving unemployment benefits? They are going to run out and when they do…that’s it.

Imagine the worse…no job…and no more unemployment benefits.

What would (will) you do? Will you look back and wish you had saved some of these benefits for your “rainy day”?

When you are sitting there with no job and no more unemployment benefits…when you are not able to put food on your table or pay your rent or mortgage…or put gas in the car…will you look back and wish you had done something more to make those unemployment benefits stretch a lot further?

Will you look back and kick yourself?

Will you look back and wonder what you were thinking…now that you can’t even pay your essential monthly bills…when you were using those precious unemployment benefits to pay on non-essential items like credit cards and medical bills…especially when you find out that there was something huge you could have done…when you find out that…in these dire straits…in this horrible economy…with no end in sight…you could have filed bankruptcy and gotten rid of all those debts?

Without doubt…you are a good person and good people do their best to pay all their bills. That’s what makes you honest.

But…when it comes down to having made a choose to pay on credit cards and medical bills, rather than having made a choice to save up some of that money to keep a roof over your family…and you ask yourself…in retrospect…which was more important…your creditors or your family…what will be your answer?

Your family of course.

Well…you already lost one or more jobs.

What makes you so sure that you will get another job…or get another soon enough to avert disaster?

And…even if you do get another job…maybe even one as good as you used to have…what says you won’t lose that job too?

The fact is that this economy is the worst that any of us have ever seen and…for as much as we all want to believe otherwise…there is no end in sight.

Quite the contrary! We have all dug ourselves a huge hole and it could well be 10 years before we dig out.

You have a chance here…if you will grab it…to look back and know that you make the tough choice and filed bankruptcy and gotten rid of all those debts…and…more importantly…put yourself in a position to keep some of those precious unemployment benefits in your pocket as a hedge against running out of money before, if and when things pick back up for you and your family.

Think about it. Are you on unemployment? Are you paying out any of this precious…one-time-only…money on credit card debt, medical bills and other “unsecured” debts?

If things don’t work out for you…if things don’t pick up and quickly…won’t you need this money to…make sure that your family survives…no matter how bad things get?

Filing bankruptcy NOW…before your unemployment benefits run out…may be the smartest thing…looking back…you ever did. It could well be the difference between your family surviving…when other families do not.

This is your chance to invest in your future…by making sure you don’t keep dragging along with you debts you know are sucking up money that you may well need to take care of your family.

Do you really want to chance it…by not filing bankruptcy?

Wouldn’t it at least make sense to find out how this whole bankruptcy thing works and what all it could do for you…to take away the guesswork and find out for sure from a lawfirm that does this stuff for a living 24/7/365?

You certainly don’t want to be looking back later, wishing you had taken the time to find out more and thinking “That was dumb.”…or worse.

And the best thing is…you can find out all about bankruptcy and what it can do for your family…for FREE…and at NO-RISK.

Find out answers & options for FREE!

Why? Because we offer a totally FREE ANALYSIS of your entire financial situation.

This means you can come in, sit down, get all the answers, and find out all your options (bankruptcy and othewise)…and do it for FREE. GUARANTEED!

Our 10 EXCLUSIVE GUARANTEES!

And…that’s not all. To make you feel more willing and less hesitant to come see us…know that we offer 10 different GUARANTEES. We just want you to get this valuable information…and to know that you can do so…AT ABSOLUTELY NO-RISK.

Want to find out about our 10 GUARANTEES? (Click Here)

If you know us at all, you know that we are not high-pressure. That’s just not who we are or how we work. The truth is…we don’t need to “sell you” on anything. If you need it…the help and relief the bankruptcy laws provide sells itself.

Trust me on this…when I say “You will be amazed when you find out…not what you have always heard but…how bankruptcy really works”…we’re not kidding and we’re not exaggerating.

The truth is the Bankruptcy Laws are the biggest secret there is…right in plain view.

You see, what happens is that you have heard so much bad about bankruptcy that…if you are like most people…you turn off at the mere mention or thought of filing bankruptcy.

But…even though you don’t know me…do me one favor. Don’t believe it. Don’t believe what you have heard. It does not work at all the way you have been told.

There is a good reason why 1.5 million families filed for bankruptcy last year…and it wasn’t because bankruptcy was so bad. Think about it…Maybe it was because…in reality…bankruptcy was so GOOD.

Maybe filing bankruptcy is right for you…maybe not.

But with a totally FREE ANALYSIS available to you…you have nothing to lose.

So, don’t wait. Call today!

Better yet, call now because every dollar of your hard earned unemployment benefits you spend on bills and debts you could get rid of…is…arguably…a dollar wasted…and a dollar wasted is a dollar no longer there to take care of your family.

During normal business hours…call toll free 1-800-899-1414

The Law Offices of John T. Orcutt
Offices in Raleigh – Durham – Fayetteville – Wilson

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Published Sunday, March 7, 2010 @ 8:10 am

Before you begin the bankruptcy process, it’s important to understand a few helpful hints to make it a more painless process:

(1) Remember: You are not Alone.
Maybe you think of bankruptcy as something for “other people.” But the days of bankruptcy as a means of financial respite for the perpetually poor are no more: everyone from the solidly middle class to formerly wealthy Americans are being forced into bankruptcy more than ever before. Because of steady declines in real estate values, and rises in health care costs, credit card interest and unemployment in all sectors, more than 8% of bankruptcy filings in 2009 came from people who made over $60,000. So, begin by dispensing with any preconceived ideas of bankruptcy in lieu of a successful strategy for setting off on a sound path to personal financial freedom.

(2) Personal Bankruptcy Puts You in Control
While people who drown in debt remain at the mercy of their creditors, bankruptcy can actually be a better way to take control of your financial future. If you file for Chapter 13 bankruptcy, you play an integral role in determining how you’ll pay off your debt, including a trusty payment plan that works for you. Even Chapter 7 bankruptcy can buy precious time to halt creditor harassment, save money and plan your next best fiscal moves.

(3) Bankruptcy Can Be a Key to Better Credit
As counter-intuitive as it may seem, bankruptcy could potentially improve your credit scores in the long run. Obviously, the immediate effect of bankruptcy is a lowering of your credit scores. However, filing can be the better option for your long-term credit than enduring late payments on credit cards for years in an attempt to stave off what is more than likely inevitable: default. Because some 35% of your credit score is based on your payment past, it is vital to your financial future to avoid missed payments and establish new credit as soon, and as much, as possible. Even though bankruptcy stays on your credit report for 7 to 10 years, it does not necessarily follow that your credit score will be low for that entire time. If you take steps to rebuild after your bankruptcy, your FICO score can quickly be restored to where it was prior to your filing.

(4) With Bankruptcy, Timing is, in Fact, Everything
When you’re facing insolvency, timing can be especially important. And that’s also the reason it’s the best time to talk to a qualified bankruptcy lawyer. But just because you’ve consulted a lawyer does not necessary mean that bankruptcy is the next step. While it’s hard to believe, it is sometimes your best move to hold off on your filing until the worst of your financial situation is over. For example, if you are facing impending medical costs, you may want to wait to file until you’ve recovered fully before filing for bankruptcy, simply to avoid accruing more medical expenses during the process. In the alternative, some situations demand that you file sooner than later, such as if your car’s been repossessed and you need it back immediately. As a result, consulting a bankruptcy expert is your best bet to making your bankruptcy work for you.

(5) With Bankruptcy, You Never Have to Go it on Your Own
Bankruptcy isn’t a cakewalk, but you never have to go it alone. In fact, knowing a qualified bankruptcy attorney can also help you conquer your creditors and face your financial fears, yielding the right kinds of support, information and insights—at a low cost— for a viable and secure future. The bankruptcy experts at the Law Offices of John T. Orcutt offer a totally FREE debt consultation and now, more than ever, it’s time to take them up on their offer. Just call toll free to 1-800-899-1414, or during the off hours, you can make your own appointment right online at www.billsbills.com. Simply click on the yellow “FREE Consultation Now” button.

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Published Friday, February 26, 2010 @ 7:15 am

For most bankruptcy bound individuals, a discharge of all individual debts is considered the Holy Grail of any bankruptcy filing, yielding a permanent injunction that prevents creditors from collecting on debts. However, any good discussion of debt dischargeability also tackles the primary exceptions to look out for when considering any bankruptcy filing.

Exceptions to the power of a bankruptcy discharge, include:

Certain Tax Obligations
Withholding taxes are not dischargeable in bankruptcy, although you may be able to use a Chapter 13 case to pay these over time (notwithstanding any accrued penalties and interest).  Similarly, sales taxes are not dischargeable, but again, Chapter 13 can establish a payment plan for lessening the load and paying this out over the long haul.

The question of whether your income tax can be discharged ultimately depends on how old the tax debt is and when you filed the tax return.  In order to be dischargeable, your tax debt for the tax year in question must meet the following conditions: the due date for filing your tax return is at least three years ago; your tax return was filed at least two years ago; the tax assessment is at least 240 days old; your tax return was not fraudulent; and you are not guilty of tax evasion.

For example, in a 2009 bankruptcy filing:

• Taxes from 2006-2008 are not dischargeable;
• Taxes from 2004 and before are eligible for review; and
• Taxes from 2005 are potentially dischargeable if the return was filed by the debtor on or before April 15, 2006. If the return was filed under an extension, then the 2005 taxes are not eligible for the following review unless the debtor files after October 15, 2009.

Fraud and Certain Credit Usages Before Filing
Fraud is a valid creditor objection to a bankruptcy discharge. To find fraud, a creditor must prove: (1) a statement made under false pretenses; (2) a material fact; (3) designed to deceive the creditor; (4) that does in fact deceive the creditor; (5) the creditor reasonably relies on the statement; and (6) the creditor suffers actual damages resulting from the reliance.

The general rule here is this: if you’re considering bankruptcy it’s best to avoid maxing out (or in some cases simply using) consumer credit, credit cards, or loans. Bankruptcy law now demands that bankruptcy bound debtors like you do not take cash advances or purchase luxury items on credit 90-days prior to your filing bankruptcy. If you do purchase large or luxury items through these means, creditors may challenge you (and these discharging these debts) in Court if they believe that you have acted in bad faith in using credit excessively.

Domestic Obligations
Alimony, child support and spousal maintenance debts are not dischargeable in either Chapter 7 or Chapter 13 bankruptcy. Additionally, the first prong of bankruptcy, the automatic stay, does not act to stop most collection efforts for these claims. An exception to this exception comes in the second type of domestic asset splitting known as equitable distribution. While equitable distribution—a dividing of martial property as a result of dissolution of the marriage—is no longer dischargeable in a Chapter 7 bankruptcy, the same is not true in Chapter 13. Chapter 13 bankruptcy, in what is called as its “super discharge,” can aid a former spouse having trouble paying their bills to eliminate this type of burden. These issues are complex, and it is important that you speak with a bankruptcy expert if you have these types of issues.

Student Loans
In an effort to protect the education lending industry, and allow student loan money for almost anyone who wants it, Congress has made virtually every advance in connection with education non-dischargeable in bankruptcy. To that end, these loans are non-dischargeable “unless excepting such debt from discharge…would impose an undue hardship on the debtor.” While the definition of “undue hardship” is ultimately to the discretion of your bankruptcy judge, if precedent is any “judge,” this is a high hurdle to surmount. As a result, if you’re considering a bankruptcy filing simply to discharge a large student loan bill, don’t lose hope, it may just be best to wait: the tide appears to be turning in Congress to loosen this exemption as the costs of education skyrocket and more and more Americans face insurmountable educational tabs.

Because of the complexities of bankruptcy law, a qualified bankruptcy attorney is a necessary tool in your financial toolbox to help you conquer your creditors and face your fiscal  fears, yielding the right kinds of debt relief—at a low cost— for a viable and secure future.  The bankruptcy experts at the Law Offices of John T. Orcutt offer a totally FREE debt consultation and now, more than ever, it’s time to take them up on their offer. Just call toll free to 1-800-899-1414, or during the off hours, you can make your own appointment right online at www.billsbills.com. Simply click on the yellow “FREE Consultation Now” button.

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Published Thursday, February 25, 2010 @ 6:05 am

In an era of extreme economic downturns and rising unemployment, having a car at your disposal has never been more necessary for work, job interviews and providing other basic fiscal needs…even as you consider a personal bankruptcy.

Yet, if you’re on the road to bankruptcy, these same economic issues and employment woes can mean you may have fallen behind on your most recent car payments, leaving your precious vehicle as a prime target for repossession by your car’s creditors. And while your bankruptcy filing’s “automatic stay” suspends a creditor’s ability to repossess most assets, you may be wondering what happens when your car is taken prior to your filing.

As with most things in bankruptcy, whether you can get your car back from your creditors largely depends on your ability to act quickly, diligently and with a purpose.

Once your vehicle has been repossessed, it is absolutely vital that you immediately seek the assistance of a qualified bankruptcy attorney, informing the attorney of the status of your car and that you need to file bankruptcy right away. While the repossession was likely caused by an inability to afford your car payment, this first, best step to get your car back through bankruptcy will require that you have enough funds to pay your attorney, the bankruptcy court filing costs, as well as the requisite credit counseling fees.

Another potential challenge, comes in the form of one word: paperwork. As time is of the essence to save your car, you must be able to provide instant information about your current financial situation so that you can file quickly and without any hidden loopholes. Typically, you will have ten days between the date of your car’s repossession to the time that the creditor actually sells the car. As a result, you and your lawyer will need to move fast.

Once you file for bankruptcy, it’s important to note that any further creditor action is stopped by the Bankruptcy Code’s automatic stay.  While the automatic stay also means that the creditor cannot sell the car once you file, it does not assure the return of your vehicle. But take heart: for a pre-petition repossession, most bankruptcy courts have procedures by which a debtor whose car was repossessed may be allowed to get the vehicle back once the bankruptcy case is filed, including the potential that the debtor will be required to pay back possession and storage fees accrued in the interim, provide proof of car insurance, and have money on-hand to pay the various court and repossession fees.  In all cases, though, the process is neither cheap, nor easy: something the bankruptcy bound individual may always want to avoid.

So, to avoid any headaches, hassles or hardships the best rule of thumb is, if you are going to file bankruptcy, do so before your car gets repossessed.  In short, knowing a qualified bankruptcy attorney can also help you not only conquer your creditors and face your financial fears, but also keep a much-needed car, yielding the right kinds of support, information and insights—at a low cost— to keep you moving (literally and figuratively) in your fiscally-viable future.  The bankruptcy experts at the Law Offices of John T. Orcutt offer a totally FREE debt consultation and now, more than ever, it’s time to take them up on their offer. Just call toll free to 1-800-899-1414, or during the off hours, you can make your own appointment right online at www.billsbills.com. Simply click on the yellow “FREE Consultation Now” button and let these experts take the wheel to so you can start down the road to your next best financial steps.

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Published Tuesday, February 2, 2010 @ 3:29 pm

It’s almost February and ‘tis the season for thinking about tax time—even more so if you find yourself considering the benefits of bankruptcy. So, if you believe bankruptcy is the right option to help you start fresh in 2010, in addition to trying to get your 2009 taxes filed in a timely manner, and wondering whether you can discharge any income tax debt in your bankruptcy filing, you may also be thinking about how you can protect your precious tax refund from creditor claims.

But, just in time to file (for taxes and/or bankruptcy), here are some timely tips for protecting your tax refund:

Alter Your Exemptions
If you’re expecting a larger tax refund in the same year you plan to file for bankruptcy, your first best step is to alter your tax exemptions and allowances in the months prior to a bankruptcy filing. Increasing your exemptions now means you’ll receive more money in your paycheck to use throughout the year and less money in the form of a lump sum tax return. In addition to the benefit of being able to apply that money to necessities throughout the year, that’ll be less money available for creditors to seize at the time of any necessary bankruptcy filing.

Apply for Advanced Earned Income
If you receive what’s known as an “earned income” tax credit you can also head off some bankruptcy issues by providing your employer with a W-5.  This special tax form allows you to receive your earned income credit on a monthly, weekly or quarterly basis. And like the tax refund, this process disburses this money directly to you, keeping your money out of government coffers and potentially out the hands of awaiting creditors.

Know Your Refund
While some can’t wait to file, many people time their bankruptcy for a time following the potential for receiving a non-exempt, but sizeable, sum.  As such, when considering your bankruptcy, it’s important to determine what your refund will be. Depending on whether you’re receiving a generous refund, you may consider holding off on your bankruptcy filing until you have had an opportunity to use the refund on your family’s necessities—spending the money on food, clothing, medical co-pays, car repairs, etc., keeping all receipts as you spend.  In the alternative, if you are planning to file for bankruptcy, do not use your tax refund to pay back relatives or friends, large sums of unsecured debt to any one unsecured creditor, or purchase luxury items, all of which could cause a problem with your bankruptcy filing in terms of creditor claims.

Know the Rules for the State You’re In
Your own state’s laws could mean your refund is partially or fully exempt from creditor claims. As a result, it is essential that you consult with a qualified bankruptcy attorney to review your individual bankruptcy situation in and around tax time. This consultation can assure you’ve attempted to protected your precious tax refund from every imaginable angle.

If you are considering bankruptcy, knowing a qualified bankruptcy attorney can also help you with additional tax decisions, yielding the right kinds of support, information and insights—at a low cost— for a financially viable and secure future.  The bankruptcy experts at the Law Offices of John T. Orcutt offer a totally FREE debt consultation and now, more than ever, it’s time to take them up on their offer. Just call toll free to 1-800-899-1414, or during the off hours, you can make your own appointment right online at http://www.billsbills.com. Simply click on the yellow “FREE Consultation Now” button.

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Published Monday, February 1, 2010 @ 4:46 pm

You may have read on the blog, or elsewhere, that many are calling our current economy a “middle class recession.” This is because the numbers are way up on bankruptcies filed by those who make more than $60,000 per year, up 6.9 percent from 2008. Bankruptcies on the whole are up 36.5 percent from this time last year.

So why does it matter how much money a person makes when filing bankruptcy? Well, because bankruptcy is often considered an escape route for the financially unreliable or worse yet, “something poor people do.” It’s just not true.

Today, bankruptcies are increasing among people in the real estate profession, namely developers and agents. When the housing bubble dissolved, so did the incomes for a lot of American families.

There are different types, or “chapters” of bankruptcy for a reason. Basically, some versions are better suited to different situations. Chapter 7, for example, is typically filed by those who may have lost a job or for some reason may not have regular source of income. It wipes out all debts, but also mandates a person dispose of their “non-exempt assets” as a way to repay creditors to whatever extent possible. If you have equity in property beyond available exemption limitations, you may have a “non-exempt asset”.  Many states’ exemptions, as well as the federal exemptions, provide some measure of protection for everything from your home to retirement accounts. It is not often the case that a family has assets beyond what available exemptions can protect.  Even if available exemptions do not cover all of a person’s property, Chapter 13 provides a way to pay the equity above available exemptions to unsecured creditors, so that a person may keep his property, if he can afford to do so.

For those who are still earning a living or at least have a source of money, Chapter 13 creates a three- to five-year payment plan. Your plan payment will largely consist of secured debt, like your car and mortgage payments. Because the plan payment can include your attorney fees, Chapter 13 is an attractive option if you do not have enough up-front money for Chapter 7 attorney fees.

Maybe you’re giving some thought to a debt-settlement firm instead of bankruptcy. Sure, it’s natural for you to want to negotiate your way out of debt. Unfortunately, many of these companies position themselves as an alternative to bankruptcy that will save your credit. More often, however, these debt settlement companies end up doing far more damage to your credit than if you had simply filed for bankruptcy from the start. Remember, just because you’re in a “debt-settlement” program, your creditors will continue to report your missed payments to the credit bureaus. A bankruptcy, while causing an initial hit to your credit score, will stop the negative reporting and allow you to rebuild your credit score faster.

Bankruptcy is an organized, legal process with pre-defined results. Debt settlement firms function under very little regulation and ask for payments before all the debts are settled, therefore the incentive to settle the debt is not as strong as if they were paid based on results or after everything is taken care of.  Thus, your “debt settlement” is by no means guaranteed.

And one more point on debt settlement agencies: the IRS considers forgiven debt as taxable income. In contrast, debt erased as part of a bankruptcy is not taxable.

Another important point about bankruptcy has to do with timing. It’s key that you don’t file too early or wait too long. Start by simply adding up what you owe and making a simple estimate on what it would take to pay it off yourself. If the discrepancy seems impossible to make up, or would force you to sacrifice your family’s needs just to make a dent in your debt load, then consult an experienced consumer bankruptcy attorney.

On the other hand, don’t wait until the car has been repossessed or the foreclosure notices start arriving. Use your head, remain calm, and speak with an attorney. The bankruptcy concept itself is fairly straightforward.  The process however, requires a good deal of legal expertise.  Engage it wisely.  Take time to understand the basics of filing.

From the Law Offices of John T. Orcutt.  Helping families through bankruptcy since 1995. Call today to set up a free initial debt consultation in one of our 4 convenient office locations. Raleigh, Durham, Fayetteville and Wilson.

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Published Monday, February 1, 2010 @ 10:48 am

The decision to file for bankruptcy is never an easy one, especially where married couples are involved. Spouses must settle issues of dishonesty, mistrust, and frustration–and that’s even before any of the complex steps of collecting necessary documents and filing papers.

But the story for insolvent couples does have a caveat: joint bankruptcy protection. Married debtors can file their cases jointly with one trustee, one filing fee, and one total case. Debtors can bring to the table their joint debts as well as debts they hold only in their name. To be a joint case, the debtors need only be legally married.  And they must be a man and a woman.

Sounds simple right?

Well, for thousands of individuals living in America today, the latter designation raises difficult questions—especially in the growing number of states that recognize same-sex marriage or its legal equivalent (“civil unions”). Yet, as the constitutionality of laws and amendments forbidding marriage equality continue to be litigated across the country, same-sex debtors seeking bankruptcy relief  face even tougher challenges.

Because it is generally accepted that the Defense of Marriage Act (“DOMA”) would preclude the filing of a joint bankruptcy petition by a same sex married couple, these folks face two very different options: (1) make two separate bankruptcy filings, or (2) pursue the right to seek bankruptcy relief as would an opposite-sex married couple. 

While the second option would be a precedent-setting endeavor, fulfilling the true meaning of marriage equality, in reality pursuing this groundbreaking goal is largely antithetical to the larger motivations of most bankruptcy bound individuals, gay or straight: getting out of debt.

In practice, a married same-sex couple will need, more than their heterosexual counterparts, the assistance of a qualified bankruptcy attorney to pull together all of their required financial information;  ensure that it is complete and their disclosures accurate; and research and prepare a case that anticipates a variety of motions attacking the joint filing. Regardless of what “party-in-interest” files the case (as defined by the Bankruptcy Code and common law), the filing will likely be challenged, even before a judge reaches such substantive issues as income, assets, liabilities, and creditors.

In this case, like others for same-sex couples seeking right-giving precedents, while the Bankruptcy Code provides one standard, constitutional arguments will inevitably reveal others that need to be briefed and raised.  Same-sex couples must expect that any decision in their favor will be appealed, perhaps more than once to a US District Court, a Bankruptcy Appellate Panel, a Circuit Court of Appeals, or maybe even the Supreme Court of the United States.  For debtors, this type legal wrangling adds ,ore time, more fees and inevitably more stress to what is undoubtedly an already nerve-racking situation.

As a result, for a married same-sex couple facing the need to file bankruptcy, the next steps can mark a tough decision: file singly or fight the system; seek your family’s financial security or a denigrated group’s fundamental rights; moving forward for your family or moving your family forward.  In the end, changing the current state of the law will take either an act of Congress or one or more very brave and very patient married same-sex couples who find themselves drowning in debt and who–in spite of these debts—also feel empowered to fight the good fight.

The state of marriage equality is not yet where it should be in the United States, and this seriously affects the legal rights of same-sex families.  But until the law changes, same-sex couples need expertise in the handling of their cases.

If you live in North Carolina where same-sex marriage is not legal, but are still considering bankruptcy, the bankruptcy experts at the Law Offices of John T. Orcutt offer a totally FREE debt consultation and now, more than ever, it’s time to take them up on their offer. Just call toll free to 1-800-899-1414, or during the off hours, you can make your own appointment right online at www.billsbills.com. Simply click on the yellow “FREE Consultation Now” button.

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Published Monday, January 25, 2010 @ 6:57 pm

Ugh. Debt. These days most Americans are sick of hearing the d-word. And who can blame us? Americans are in more debt now than ever before. Avoiding debt seems impossible…there are so many things you can’t even do without credit cards or loans that we now take debt as a matter of course. Despite our negative feelings about debt, Americans want to repay what we owe. In fact, this noble instinct is what keeps some people from filing for bankruptcy when they desperately need to do just that. Not only are people afraid of having a negative impact on their credit scores (which in fact may already be in the basement), they also feel that the right thing to do is pay back debt.

When it is possible, paying back debt is the right thing to do, no doubt about it, but most people who declare bankruptcy don’t end up in a bad situation because they made negligent mistakes or don’t feel like paying; instead, dealing with the curve-balls life throws at us can prevent us from meeting obligations. By the time people opt to declare bankruptcy, they are not unwilling to pay back debt they simply can’t. The thing to remember is that creditors know that and take these factors into account. This is the reason creditors charge higher interest rates when they extend unsecured credit. If bankruptcy is the right decision, you shouldn’t allow misgivings about not paying certain kinds of debts hold you back.

What many people don’t even consider is that declaring bankruptcy can actually help you pay back debts. Consider this example: Say you are considerably behind on payments that are secured by your home or your car. In such a situation, filing for Chapter 13 bankruptcy can allow you to reach a compromise between what is feasible and what your creditors expect. In a Chapter 13 bankruptcy, a repayment plan could save your home from foreclosure by allowing you to catch up on back payments. Similarly, a Chapter 13 repayment plan can allow you to catch up on back payments for your car, helping you to avoid losing your vehicle to repossession. In both situations, the creditor is receiving payments for the credit they have extended, and you are working with a plan you can actually meet. This also applies to debts that you would not be able to discharge in a bankruptcy, such as child support payments and back taxes owed to the IRS. A Chapter 13 plan can help you make up for missed payments in the past while easing the pressure of being hassled and worried about never catching up. Eventually, with a good Chapter 13 plan, you are more likely to succeed in getting current on all your required payments.

A strategically timed bankruptcy can also help you in those situations where you may be able to pay off all your debts by selling assets, but you simply need more time. With aggressive creditors hassling you constantly, you may end up selling assets for less than they are worth, just to do so more quickly or to avoid penalties. This could land you with debts still to be paid and no assets to boot. A typical example is if your home is foreclosed on. Your home is not likely to sell for what it is actually worth if it goes through foreclosure. This means that you will no longer owe the mortgage company, but you will also lose the value in your home, if any, that exceeded the value of the mortgage. By declaring bankruptcy and forestalling foreclosure, you reap the actual benefit of your investment and potentially pay back everyone you owe.

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Published Wednesday, January 20, 2010 @ 11:34 am

In this special series, entitled “Bad Ideas for the Bankruptcy Bound,” we’ll introduce what to avoid when bankruptcy is your next, best step.

Love may move mountains,
but money can crumble the strongest marriage.
– Ron, Lieber, The New York Times

Everyone who’s married knows: money can be a primary cause of marital strife. As a result, in this especially difficult economic climate—full of job insecurity, rising mortgage costs, health care uncertainties and other mounting money woes—many debtors who have accumulated all kinds of debt without the knowledge of their spouse are sometimes tempted to file for bankruptcy “secretly” and avoid sharing the financial “bad news” with their spouse.

Regardless of the fiscal reason, this path can lead to losing it all with your better half. While one petitioning spouse doesn’t mean the other has to file for bankruptcy also, it’s assuredly never a good idea to hide a filing from your husband or wife. Here’s why:

Disclosure of Your Debts is Inevitable
While married people like you have a legal right to file for bankruptcy by your lonesome, what you don’t have readily available is any way to keep the news of your bankruptcy filing from your spouse. When you stop paying your creditors in anticipation of your bankruptcy filing, inevitably these same creditors will begin calling and writing your home—the same space you share with your unknowing spouse.  Remember, the bad news of your insolvency can come from you or them, with a bit less sensitivity from the latter.

You’ll Need Your Spouse’s Support
Married folks who file for bankruptcy must provide information regarding their spouse’s pay, last year’s tax returns, proof of retirement and an array of other information that might require your better half’s information and input.  Keep in mind, your requests for this information will ultimately raise your spouse’s suspicions and the likelihood of your spouse finding out—one way or another.

Joint Accounts Automatically Get Your Spouse Involved
Filing for bankruptcy means that if your spouse’s name appears on any of your debts—such as joint credit cards, mortgages, or the like—they’ll find out the hard way when creditors pursue them for an alternative way to get paid.  In addition, if your spouse is using one of the forms of credit that will be included in the bankruptcy filing, you’ll need to tell him or her to stop using this credit before you file—another reason your spouse will be alerted to your insolvency.

Don’t Risk More Stress in Insolvency
Obviously, hiding your debts from your spouse is dishonest. Hiding your bankruptcy from your spouse, as you’ve seen, is almost impossible.  Both non-disclosures will add unnecessary stress and strife to your relationships. And amid these harsh economic times, life can be tough enough without all of this interpersonal withholding.  The first step to a fresh financial start together, is being honest about your bankruptcy with your spouse. Don’t forget, there is no more ruinous a financial move than a divorce and no greater road to divorce than fiscal dishonesty.

Knowing a qualified bankruptcy attorney can also help lessen the marital stress of bankruptcy, yielding the right kinds of support, information and insights—at a low cost— for a financially viable and secure future.  A good bankruptcy attorney can also dispel the many myths and stigmas of bankruptcy, offering truthful information about this powerful form of debt elimination. The bankruptcy experts at the Law Offices of John T. Orcutt offer a totally FREE debt consultation and now, more than ever, it’s time to take them up on their offer. Just call toll free to 1-800-899-1414, or during the off hours, you can make your own appointment right online at www.billsbills.com. Simply click on the yellow “FREE Consultation Now” button.

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Published Tuesday, January 19, 2010 @ 2:48 am

The holidays are now officially over. The New Year has begun in earnest. And ‘tis the season for tax time. If you believe you’re bankruptcy bound in 2010, that definitely means it’s also time to get your 2009 returns in order.

Thinking About Chapter 13 Bankruptcy?

Chapter 13 bankruptcy helps restructure your debt into a more manageable payment plan—allowing you to pay back what you owe over time, often at a percentage of the cost. If you’re considering this type of bankruptcy, it’s important to remember that tax returns should be provided in Chapter 13 cases.  You must file all tax returns for all tax years – including returns for 2009.  Bankruptcy Code Section 1308 provides:

(a) Not later than the day before the date on which the meeting of the creditors is first scheduled to be held under section 341(a), if the debtor was required to file a tax return under applicable non-bankruptcy law, the debtor shall file with appropriate tax authorities all tax returns for all taxable periods ending during the 4-year period ending on the date of the filing of the petition.

(b) (1) Subject to paragraph (2), if the tax returns required by subsection (a) have not been filed by the date on which the meeting of creditors is first scheduled to be held under section 341(a), the trustee may hold open that meeting for a reasonable period of time to allow the debtor an additional period of time to file any unfiled returns, but such additional period of time shall not extend beyond–

(A) for any return that is past due as of the date of the filing of the petition, the date that is 120 days after the date of that meeting; or

(B) for any return that is not past due as of the date of the filing of the petition, the later of–

(i) the date that is 120 days after the date of that meeting; or

(ii) the date on which the return is due under the last automatic extension of time for filing that return to which the debtor is entitled, and for which request is timely made, in accordance with applicable nonbankruptcy law.

In plain English, this verbose section of the Bankruptcy Code means that if you’re a Chapter 13 filer, you must file your tax returns before the creditor’s meeting to assess your ability to repay your debts.  If you have yet to file, your bankruptcy trustee (appointed to evaluate the case and serve as an agent for collecting your payments and making distributions to your creditors), may continue the meeting until it is filed, up to 120 days.  After this 120-day window, your case can be dismissed.  As such, it’s best to be proactive, avoiding any reliance on an extension.

What About Chapter 7?

If you’re considering filing a Chapter 7 bankruptcy in order to dispense all of your unsecured debts, the tax implications are a bit different.  In this case (as in a Chapter 13 case), it is vital to alert your bankruptcy attorney if you expect that you will owe taxes pending the filing of your 2009 return.

On the other hand, if you expect a refund, like the majority of Americans, based on where you live and other considerations, this financial return (or a portion of it) may be considered an asset of the bankruptcy estate, and, as such, will only be protected to the extent you can protect it with state exemptions (up to $10,000.00 for a married couple in North Carolina).

If you’re considering bankruptcy in 2010 and are concerned about the tax implications, including when to file, whether you can keep your tax refund, and any other factors in your personal circumstances that might require consideration, it’s important to speak with an experienced bankruptcy attorney who can competently guide you on the right path to the best result.

The bankruptcy experts at the Law Offices of John T. Orcutt offer a totally FREE debt consultation and now, more than ever, it’s time to take them up on their offer. Just call toll free to 1-800-899-1414, or during the off hours, you can make your own appointment right online at www.billsbills.com. Simply click on the yellow “FREE Consultation Now” button.

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Published Monday, January 4, 2010 @ 12:08 pm

In states like North Carolina—composed largely of rural areas dotted with farmland and abutting the ripe fishing grounds of the Atlantic—Chapter 12 bankruptcy can be exceptionally helpful to working farming and fishing families who might otherwise be bankruptcy bound.

In part one of the four-part series, entitled Chapter 12 Bankruptcy, we introduced the concept of Chapter 12, provided a brief overview of the special rights related to this protection, and shared who (or in some cases, “what”) qualifies as a family farm or family fisherman under the Bankruptcy Code. In this section, we’ll discuss how a Chapter 12 bankruptcy works, from initial petition filing to debt repayment planning.

If you qualify under the Bankruptcy Code’s broad definitions of a “family fisherman” or “family farmer,” a Chapter 12 case begins by filing a petition with the bankruptcy court where you live or the location of the “principal place of business” for your corporation or partnership. A qualifying husband and wife “family farmer” or “commercial family fisherman” may file. Unless the court orders otherwise, the petition includes a statement of your assets and liabilities; current income and expenditures; current business contracts and leases; and a general statement of your financial affairs.  In order to satisfy all of these petition requirements, you’ll need to gather a list of all creditors and the amounts and nature of their claims; the source, amount, and frequency of your income; a list of all of your property; and a detailed list of your monthly farming/fishing expenses, as well as living expenses, including food, shelter, utilities, transportation, feed, fertilizer, etc. In order to completely evaluate your household’s financial position, married individuals must gather this information for each spouse regardless of whether they are filing a joint petition, separate individual petitions, or even if only one spouse is filing.

Upon filing for Chapter 12, you must pay a filing fee and a miscellaneous administrative fee with the clerk of court. With the court’s permission, and with specific deadlines, these fees may be paid in installments. Failure to pay these fees may result in dismissal of your case.

Filing the petition under Chapter 12 provides an automatic stay that stops most collection actions against you or your property. Under the automatic stay protection (a protection that exists under all forms of bankruptcy), any creditors—public or private—are not allowed to call you or send you collection letters. During the proceeding, they cannot continue any legal action against you, foreclose on your home, or repossess your car and other assets. And–even if a garnishment order has been issued–the automatic stay stops garnishment of your wages. Additionally, a Chapter 12 filing has the added benefit of protecting co-debtors (those liable with the debtor) from eager creditors seeking collection of consumer debts incurred by a personal, family, or household purpose.

When you file for Chapter 12 bankruptcy, an impartial trustee is appointed to evaluate the case and serve as an agent, for collecting your payments and making distributions to your creditors. Following your filing, the Chapter 12 trustee will hold a “meeting of creditors” at which you will discuss your financial affairs and the proposed terms of your repayment plan. From this meeting, parties typically resolve problems and repayment schedules. Afterwards, you, your trustee, and interested creditors attend a hearing confirming your personal Chapter 12 repayment plan.

Whether your bankruptcy is simple or complex, you’ll need an expert attorney to navigate the waters. Contact the experienced attorneys at The Law Offices of John T. Orcutt. Please note that while the Law Offices of John T. Orcutt does not file under Chapter 12, our office can evaluate your personal financial situation and refer your case to an experienced Chapter 12 practitioner if needed. Call us today: 1-800-899-1414.

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Published Monday, December 28, 2009 @ 7:10 am

The New Year is a few days away. And without doubt, millions of Americans will welcome 2010 with grand hope, desperate to put 2009 far behind them, the year the Great Recession took hold of our collars and shook us into submission. Unfortunately, many Americans will greet the end of the 2000’s first decade still in debt and financially directionless.

But that doesn’t have to be the case.

Bankruptcy, despite all you may think you know about it, can make 2010 the year you really start over, the year things become as you make them, the year you regain control.

The federal government is reporting that with 2009’s end, so goes the worst national economic era to strike the 50 states in decades. Much of this optimism, unfortunately, has failed to provide security. The talus is simply too loose, the slope too steep and the edge too precipitous for Americans to feel confident in the footholds being provided. Unemployment continues to shroud our workforce in a cloak of despair and frustration. All the positives can be too easily brushed off as temporary, government-designed band-aids that do nothing for long-term care and instead will soon peel off, exposing our credit card cuts and sub-prime avulsions to additional economic bacteria.

However, treatments are plentiful. And bankruptcy is one of them.

The bankruptcy process, when handled by a competent, established attorney, is a very respectable way to handle the stress and prevent the longstanding financial damage that un-attended-to debt can do to a family.

Most people who give thought to bankruptcy quickly brush it off as an escapist’s tool; something the irresponsible do to cover their mistakes. Well, if you were to start asking around, it would take little time for you to uncover that most of those who have filed for protection are professional, educated and careful with their money. You will also find that things like sudden unemployment, medical bills and emergency life expenses do not discriminate. They affect everyone and if we were universally prepared for those types of setbacks, we wouldn’t need the bankruptcy code.

Back in 1934, the U.S. Supreme Court established the need for a federal measure that could assist the honest debtor in repairing their economic wherewithal. That same year, an opinion was written on the matter that said:”(Bankruptcy) gives the honest but unfortunate debtor … a new opportunity in life and a clear field for future effort, unhampered by the pressure and discouragement of preexisting debt.”

A few years ago, the lending industry powered a major revision to the bankruptcy code called The Bankruptcy Abuse Prevention and Consumer Protection Act. Despite its title, it was designed to make filing bankruptcy more difficult. It was meant to perpetuate the stigmas and make people less tolerant of those who have to file.

The law changes included the “Means Test,” which was designed to qualify a person for Chapter 7. If you made too much money, suddenly you are not eligible to file under the same guidelines as others. The questionable constitutionality aside, the law served to make the bankruptcy code that much more tedious and frustrating for people. Without question, it prompted many people to avoid filing altogether and made the protection of our established laws that much more difficult to obtain. But don’t buy into the myths or the hype. For 99.9% of you, bankruptcy is still a valid option. And the Law Offices of John T. Orcutt know how to make the new bankruptcy laws work for you!

If you want 2010 to ring in on a positive note, don’t do what you did in 2009. Let facts drive your decisions, not misappropriated stigmas and half-truths. It’s your New Year, give yourself a reason to make it a happy one.

In North Carolina, contact the Law Offices of John T. Orcutt. 1-800-899-1414.

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Published Wednesday, December 23, 2009 @ 5:49 pm

Even in these tough economic times, everyone wants their family and friends to have a nice holiday—full of fun, frivolity and festive giving. And, even if you find yourself among the millions considering bankruptcy in the New Year, you may believe, now more than ever, that it’s open [holiday] season to shop for pricey presents using problem credit cards. In fact, many Americans do charge up expensive tabs in the months preceding the Christmas season when anticipating a bankruptcy—hoping to secure some great gifts prior to wiping away these same debts, along with many others, in January or February.

However, it’s never been more important to avoid a holiday spending binge when seeking this fresh financial start. While prudence alone should speak to some of the reasons to avoid abusing bankruptcy for seasonal gains, the Bankruptcy Code itself addresses the issue of this type of credit card debt as well. Section 523(a)(2) exempts from discharge, any debt that was obtained if an individual made material and false representations about his financial condition (i.e. lies on the credit application). Section 523(a)(2)(C) provides that:

1. consumer debts owed to a single creditor and aggregating more than $500 for luxury goods or services (luxury goods defined as goods or services reasonably not necessary for the support or maintenance of the debtor or a dependent of the debtor) incurred by an individual debtor on or within 90 days before the order for relief under this title are presumed to be nondischargeable; and

2. cash advances aggregating more than $750 that are extensions of consumer credit under an open end credit plan obtained by an individual debtor on or within 70 days before the order for relief under this title, are presumed to be nondischargeable;

Section 523(a)(2)(a) excepts from discharge money, property or services incurred by false pretenses, a false representation, or actual fraud (i.e. incurring debt that you knew or should have known that you would not be able to repay).

In layman’s terms, this translates into a stern warning against unnecessary, binge spending in the months leading up to your bankruptcy. As a result, if you do decide to charge up hundreds or thousands of dollars in charges in November or December and then try to discharge that debt in January or February, credit card lenders have three viable arguments they can use to object to discharging your debt in a bankruptcy case. This type of “discharge litigation” not only risks hefty exemptions from your debt relief, but it is also costly to defend, adding more expensive fuel to the insolvency fire.

What can be even more expensive is how these holiday spending sprees can create potential delays in your bankruptcy filing. Often, a bankruptcy attorney will advise clients in the New Year who reveal large Christmas credit card statements, to wait four to six months at a minimum before filing for bankruptcy—during which time you must continue to make regular payments on your new, larger holiday balances.

If you are already in debt, credit card or otherwise, or facing a loss of income, it’s essential to fight the urge to use plastic to purchase that big screen television, new game console, latest toy or anything else you can’t afford. And, if you’re bankruptcy bound, but must spend during this holiday season, as an alternative to credit, try carrying cash, checks or debit cards. As a result of using the money you actually have, you may make more thoughtful purchases and spend less this season, and, in the end, spend less time digging yourself out of post-holiday season debt and its inevitable barriers to bankruptcy.

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Published Friday, December 18, 2009 @ 7:21 pm

Last Friday, the House of Representatives passed a wide-reaching swath of financial reforms, designed to reign in the worse excesses of the banking industry. Democratic lawmakers are hailing the bill as a huge victory for consumers. However, one important provision failed to pass: cramdown.

‘Cramdown’ would allow bankruptcy judges to reduce the principle balance of the mortgage on a primary residence in a Chapter 13 bankruptcy, resulting in lower monthly payments for the filer. It’s important to note that bankruptcy judges are already allowed to practice cramdown for a variety of debt, including boats, cars, vacation homes and family farms. In fact, prior to changes in the bankruptcy laws in 1978, they were able to cramdown residential mortgages as well.

Support for cramdown began gaining strength last spring, when the drop in housing prices caused a rise in foreclosures and a spike of people ‘under water’ in their homes. As the recession got worse, more people became vulnerable. Many Democratic lawmakers argued that cramdown was a necessary provision that would allow more people to stay in their homes. The banking industry countered that it would raise costs for everyone and divert capital from the mortgage market at a time when it desperately needed more, not less funds. Observers pointed out that banker’s fears were unrealistic; banks already eat the loss in a foreclosure, so how would this law upset the whole system?

Meanwhile, the Obama industry introduced housing reforms, notably the Making Houses Affordable, a program designed to encourage mortgage companies to voluntarily modify loans and keep people in their homes. While the program does offer some financial incentives, industry observers note that mortgage companies make far more money from the fees involved when a homeowner goes foreclosure.

In April, the House passed cramdown, but it stalled – badly – in the Senate. Twelve Democrats joined with every Republican to defeat it.

This fall, nearly everyone agrees that the MHA program has been a failure. Far fewer loans have been modified than the administration hoped; foreclosure rates continue to rise across the country. It’s hard not to see the lack of cramdown as a pertinent factor. Cramdown would offer the homeowner some leverage. If mortgage companies refused to modify loans, the homeowner could have filed bankruptcy and the decision to modify or not would have rested with an independent party, the judge. As it is, judges are unable to modify the loans, which leaves the entire decision in the hands of the mortgage company.

That’s why Democrats in the House included cramdown again, in the package of regulatory reforms they voted on last Friday. However, this time – under some pressure from small banks and credit unions – the measure failed to pass even the House.

What’s the future for cramdown? It doesn’t look good. Without some radical change somewhere, it doesn’t look like cramdown will even come up for a vote again. This is too bad; this provision would not only be very helpful to many individual homeowners, it has the potential to send ripples through the housing market as well.

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Published Sunday, November 29, 2009 @ 2:48 pm

Americans young and old, hit hard by the recent economic meltdown, are turning to any available income, accounts, or other resources to pay down today’s mounting mortgage debt, crushing credit card rates and high health care costs. One such resource—liquidating a registered retirement account like a 401(k)—might appear to be a quick and easy fix to pay down looming expenses or even to avoid filing for bankruptcy.

In reality however, it’s better to “stay away” from 401(k)s, leaving these and other retirement accounts untouched and intact in times of financial distress—even for those bankruptcy bound.

Why, you ask?

Retirement Accounts Like Your 401(k) Are Exempt From Bankruptcy
First and foremost, it’s important to understand that your 401k is safe—even in bankruptcy. Assuming your registered retirement accounts, such as IRAs, 401(k)s, and pension plans, have not been used to secure loans, they’re considered protected assets. And recent amendments to the Bankruptcy Code have made these exemptions available in all states. In the alternative, cashing out a 401(k) automatically means losing your hard-earned savings, higher taxes, and potential delays in any bankruptcy filing.

Cashing Out a 401(k) Means Paying [More] Out In the Long Run
Using retirement savings to pay creditors can create new debt in the form of income taxes and early withdrawal penalties. In fact, considerably higher taxes are the norm if you cash in valuable retirement assets like your 401(k). This heavily taxed income also cannot be discharged in bankruptcy for years and may prevent other qualifying deductions. As a result, this expensive option creates even more economic troubles for families struggling with already weighty debts and considering the benefits of bankruptcy.

401(k) Liquidation May Provide a Substantial Burden to a Productive Bankruptcy
In terms of burdening your bankruptcy proceedings, liquidating your 401k to pay creditors could mean significant delays in productive bankruptcy results. Any cashed out 401(k) funds will be counted as income and considered when evaluating your economic status pending bankruptcy. Therefore, any withdrawals from 401(k)s should be disclosed to your bankruptcy attorney immediately.

401(k)s Fund Your Future
Just as bankruptcy provides a much-needed stopping point for those drowning in debt, maintaining registered retirement accounts, such as IRAs, 401(k)s, and pension plans—even in tough times—provides a comparable and essential starting point for your family’s viable financial future.

So, before you consider liquidating any retirement accounts, such as IRAs, 401(k)s, and pension plans, talk to the skilled bankruptcy attorneys at The Law Offices of John T. Orcutt.

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Published Wednesday, September 23, 2009 @ 10:41 pm

Say you find yourself struggling with a mountain of debt. Your paycheck seems to be spent before you even get it, as soon as you pay a bill another one arrives, and you’re starting to wonder how much longer you can deal with the stress of unmanageable debt. To make matters worse, you fall behind on your housing payment and your bank threatens you with foreclosure.

So when your phone rings and a professional sounding individual on the other end promises to stop your foreclosure or even modify your mortgage, you see it as a godsend! After all, the government has been promising to help Americans hold on to their homes. A foreclosure assistance agency may even be part of a government effort to help people just like you. As a matter of fact, nothing the “foreclosure assistance agency” says leads you to believe otherwise. Should you take the leap?

Unfortunately, as all too many have learned the hard way, there are no miracle cures when you have serious debt problems. With so many people struggling to hold on to their homes, it comes as little surprise that scammers are taking advantage of vulnerable homeowners at the worst possible time.

So how do these schemes work? In most of these scams, a company will call a homeowner and offer help in stopping a foreclosure. Some companies are little more than a call center, with no attorneys, accountants or loan specialists employed.. The companies demand a fee upfront, sometimes as much as $3000.00. Desperate homeowners will pay the fee, only to discover–often when it is too late–that the company did nothing at all to help them.  Because of this all too common model, one measure the FTC is considering is a ban on up-front fees for mortgage assistance.

Since April, the government has promised to crack down on “foreclosure assistance” outfits posing as government agencies. Now, a recent meeting of the multi-agency taskforce created by the Obama administration to address the problem of mortgage fraud updated the public on the government’s efforts.The FTC brought civil charges against two companies this week that were running foreclosure assistance scams. This brings the number of such cases this year to 22.

One of the worst aspects of this situation is that many of the companies work to create the impression in homeowners that they represent a government agency. The two companies charged this week were doing precisely that, and the government is working hard to crack down on these wrongdoers in particular. It’s your responsibility as an informed consumer to protect yourself. If you are being asked to pay a hefty upfront fee, it’s a good sign that the modification program is a scam. And remember, bankruptcy is always an option if you are behind on your mortgage. A Chapter 13 bankruptcy will catch up your missed payments over a 5 year plan, and eliminate your unsecured debts. Contact a bankruptcy attorney today to find out more. In North Carolina, contact the Law Offices of John T. Orcutt at 1-800-899-1414. Or visit www.billsbills.com to complete our confidential debt questionnaire.

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Published Thursday, September 3, 2009 @ 9:43 am

The economy is so grim right now it’s hard to see the silver lining, but the good news about markets is that they rarely stand still forever. Even now, economists are slowly and cautiously becoming more optimistic about the situation, and consumers are gradually gaining back confidence. The housing market, for example, posted a quarterly rise in prices for the first time in three years, which may indicate a stirring of recovery. Still, there are a lot of homes out there not worth half what they were recently, and new construction has ground to a halt for the time being. Is there a silver lining in this one for you?

Well, there may be if you are not a homeowner and not looking to become one immediately. With so many properties sitting empty while the market waits for buyers to return, people who are not homeowners can enjoy a renter’s market. Suddenly there are many options for housing–nicer places at must lower prices. In some areas of the country, it is actually cheaper to rent than to buy at the moment.

If you are considering or already preparing to file for bankruptcy protection, you may be worried about your ability to rent a home, since so many landlord applications now require a credit check and/or ask about past bankruptcies. Don’t let such questions dissuade you from pursuing a rental you really like. Because this is a renter’s market, landlords may soften some of these requirements. Most landlords will be more concerned with your payment history with past landlords than whatever happened with your credit cards. If you have a good history with someone, ask him if you can use his name for a reference and offer to provide it for the new landlord when you apply. Other times you may be able to bargain with the landlord by offering to pay a slightly larger security deposit or providing other assurances of payment. Remember that as much as you need a place to live, landlords need tenants to make money from their real estate investments―or in this market, just to minimize losses!

Home ownership has some real advantages, and many people feel that it’s a waste of money to pay rent that will never translate to equity. However, home ownership comes with its own host of troubles, and renting can be a good solution, even if just in the short term. Home ownership is a big step, and you may want to allow yourself some breathing room (and an opportunity to rebuild your credit) before taking the plunge. If so, you might as well take advantage of a renter’s market!

If you already own a home, but are having trouble with the monthly payments, bankruptcy is a great option to get caught up on the missed payments. Unfortunately, some people wait until it’s too late to take advantage of these protections, and by the time they accept that bankruptcy is their best option, it may be too late for bankruptcy to help. That’s why it’s important to contact a bankruptcy attorney early in the process, before your finances are beyond repair. If you have conceded that it not financially feasible to keep your home, bankruptcy acts as a shelter from the after effects of a foreclosure, such as tax liability and deficiency judgments. Further, if foreclosure is imminent, a bankruptcy will stop the foreclosure from proceeding, even if you intend to surrender the property in the foreclosure. This strategy can buy your family some time to transition to a new living arrangement.

These are strange days for homeowners and those considering home ownership. If you have doubts about your future financial viability, it may be best to wait out the recession before plunging into the real estate market. If your income is already stretched to the max by debt payments, consider speaking with a bankruptcy attorney. A properly planned bankruptcy can put you in the best possible position to rebuild your damaged credit and pursue home ownership in the future.

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Published Monday, August 17, 2009 @ 1:52 pm

It’s generally not good practice to pay unsecured creditors just before filing bankruptcy. This is especially true if you plan on paying back a friend or relative. This means that if you’re considering a bankruptcy, you shouldn’t repay your Cousin Ted that $1,000 you owe him from vacation last year. A repayment constitutes preferential treatment of an unsecured creditor, and if you then file for bankruptcy, the Trustee will sue Cousin Ted to recover the $1,000.00

If this happened to you, don’t beat yourself up about it, it’s one of the more common pre-filing mistakes. It’s completely understandable that a good portion of your financial guilt stems from not being able to get square with friends and relatives. However, you need to make sure you don’t do it again, because it can make things quite a bit worse, especially for your favored insider.

Wait, what’s an “insider?” That sounds underhanded…

Basically, an insider is a person who is close enough to you for the court to be swayed into believing they have a strong enough influence over you to impact payment decisions. Insiders are not automatic and are determined on a case-by-case basis. If a person is found to be an insider, the trustee can retrieve preferential transfers from them as far back as a year before bankruptcy.

Ex-spouses can sometimes be considered insiders, provided you two are still on speaking terms. But if things are bad enough between you, he or she may be begging to be labeled an insider. As you can see, this is one component of preferential transfers than can get pretty sticky.

Here is a quick breakdown of the type of payments that are not preferential:

• Small payments: Payments less than $600 to a single creditor within the defining time period, typically 90 days or up to a year if involving an insider.
• Payments on secured debts: Car and house payments are not preferential, because you are obligated to pay them as secured debts.
• Current expenses: You are not going to get in trouble for paying your current bills and other monthly obligations. Be somewhat careful here, though, as back rent could be considered preferential. Talk to your attorney about this and all payments you have made prior to filing.
• Overdue alimony or child support: These payments also need to be made and can’t be recollected by a trustee.

Every post here is to help educate and inform you about the world of bankruptcy. If you are considering bankruptcy, but feel a moral obligation to repay a friend or relative first, speak with a bankruptcy attorney before you make a costly mistake. In North Carolina, call the Law Offices of John T. Orcutt at 1-800-899-1414 for a free debt consultation.

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Published Sunday, August 16, 2009 @ 6:41 pm

Fear of foreclosure is certainly pushing many families into bankruptcy. Although there are now many programs, both at the state and federal level, to help homeowners avoid foreclosure, if your lender is unwilling to work with you, bankruptcy may be the only way you can stay in your home.

Unfortunately, if you don’t choose to seek help through a bankruptcy attorney or your lender, there are plenty of criminal actors out there that would be more than happy to assist in escaping your financial woes.

With the rise in bankruptcies and foreclosures across America, thieves are growing more bold in their effort to take whatever belongings, and dignity, from those facing the most challenging of economic circumstances. Perhaps the most rampant perpetrators are fraudulent mortgage modification companies, who take thousands upfront from unsuspecting homeowners, only to disappear into thin air. Don’t ever agree to an upfront fee for a mortgage modification, and don’t ever agree to make your mortgage payments to a third party who promises to forward your payments directly to your lender. If you are working with a legitimate mortgage modification company, stay involved in the process. It’s important to maintain constant contact with your mortgage lender and your loan modification company.

Bogus loan mod companies aren’t the only criminals taking advantage of desperate homeowners. Grifters are moving into what appears to be a more legitimate method of theft: buying houses.

Targeting those in high-foreclosure zip codes, representatives from shell companies are offering to buy houses from those in dire straights. They sell the fear of foreclosure and bankruptcy and offer to make them a clean, easy deal and a quick sale. Heck, they even hand people money for the house. Real money! So it can’t be a scam, right?

First off, they only give you a very small amount of money, regardless of the equity in the home or its market value. Since you’re desperate, it’s a fair number, right? The plan calls for the company to buy the home and rent it, allowing you to move on with your life. However, the rent payments they collect never make it to the mortgage company. In fact, the sale never gets recorded, there’s no legal closing and you are still responsible for the mortgage. By the time it’s all sorted out, they’ve collected months of rent, from most likely planted tenants, and moved on. The hand-written signs on freeway exits and the local Craigslist’s posts that offer to buy and close fast are nine times out of ten the mark of illegal activity.

State regulators believe that there are close to 50 “fast home buy” operations currently working in North Carolina, some of which are perfectly legal with solid reputations. But those companies are easy to recognize. They have sound records with the Better Business Bureau, prominent advertising and established offices. Keep in mind though, in the majority of cases, a fast sale is a bad idea and a short sale even worse. A short sale requires your lender to accept less than the outstanding loan amount. Many times the lender won’t really forgive the deficiency, requiring you to sign a promissory note covering the difference. The tax implications of a short sale can be substantial as well. Any time a creditor agrees to accept less than what is owed, they will report the deficiency as taxable income to the IRS. Not only did you lose your home, but now you owe taxes.

Don’t fall prey to a foreclosure rescue scam just because you were afraid to consider bankruptcy. If you’re facing a foreclosure and your lender is not working with you, a bankruptcy attorney is your best ally. Bankruptcy can keep your family in your home, and if you truly can’t afford the home, surrendering it in a bankruptcy shields you from any remaining personal liability on the loan. Don’t wait another day to call. In North Carolina, contact the Law Offices of John T. Orcutt for a free consultation. 1-800-899-1414.

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Published Tuesday, August 11, 2009 @ 6:00 pm

Believe it or not, there are some situations when credit cards can be a benefit. They are often the only option when making travel reservations, and can come in handy in the event of genuine emergencies. A credit card can also help you build good credit, or rebuild credit after bankruptcy.

Yep, so that’s about four reasons. The reasons NOT to use credit can fill a book, but here are just a few situations in which using plastic seems like a good idea, but you’re much better off just saying no!

Department store credit accounts: notoriously high interest rates are just one great reason to avoid department store credit accounts. But did you know that sometimes proprietary credit accounts from merchandisers allow the seller to take an interest in the things you buy on credit? This means that should you find yourself in a financial emergency down the line and unable to repay them, they could be entitled to take your stove or washing machine back. North Carolina law offers some protection against these disguised secured debts, but it’s best to just to avoid them altogether

Paying your taxes with your credit card: Taxes are not necessarily dischargeable in bankruptcy the way unsecured debt is…and your credit card debt won’t be either if you used the card for non-dischargeable debt! This will apply to other non-dischargeable debt as well, so be careful about putting payments to , for example, student loans, on your charge accounts. But note that only the part of the credit card debt you use to pay non-dischargeable debt will itself be non-dischargeable.

Balance transfers: A classic  marketing strategy of the credit card industry is offering lower interest rates on balance transfers. They way they sell this nonsense is to make you believe that it will be cheaper for you in the long run. But the situation isn’t as simple as they’d like you to believe. If you do a balance transfer, you’re taking on new debt. Unless you’re committed to shutting down the first account for good, you’re exposing yourself to the temptation of more debt. Many people believe they will be able to play this game successfully, and the credit card industry has made billions by playing on this belief.

A balance transfer could also force you to delay filing for bankruptcy, because if you do one just prior to filing, it may be viewed as a preferential transfer.

Big purchases right before bankruptcy: Speaking of charging up just prior to bankruptcy, you definitely want to avoid anything that could look like fraud. If the credit card company can convince the court that you made purchases on the card with the intention of filing for bankruptcy, the debt may become non-dischargeable, and you may be putting your whole filing at risk.

Living off credit to avoid filing for bankruptcy: This is an absolutely TERRIBLE idea. All you’re doing is creating bigger and bigger problems for yourself. If your situation cannot be managed without credit–if you find yourself taking out credit to pay for prior credit, it’s past time for you to consider bankruptcy as a lasting solution to your financial problems.

In North Carolina, call the Law Offices of John T. Orcutt to set up a free initial debt consultation. Convenient office locations in Raleigh, Durham, Fayetteville and Wilson.

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Published Saturday, August 8, 2009 @ 8:47 am

We hear plenty about the dangers of gambling addictions. Perhaps this is because the compulsion to gamble doesn’t make sense to a lot of people, and it is always easier to vilify from a distance.  Or maybe it’s that gambling addictions seem dangerous because a gambler could lose everything in an instant.

By comparison, indulging in little purchases here and there seems rather tame. But even little purchases add up, and when you get a rush from spending, chances are you’ll spend more money and spend more frequently to continue to experience that comfort. Just like someone addicted to gambling, you could lose everything; it may not happen in an instant, but little warning signs ignored for years will add up and catch up eventually.

Compulsive spending and shopping addiction are very serious problems that don’t get as much attention as they ought to. As a result, there are likely many out there suffering in silence. If you suspect you are a compulsive spender, that bad news is that you may be right–but at least you’ve recognized that there is a problem that you want out of your life. Admitting you have a problem is, as they say, the first step. If you think you may have a problem with your spending, take a moment to run through some of the items that frequently appear on compulsive spending checklists:

Is pressure from debt affecting your home life? Is it affecting you on the job?

If you are constantly having fights with your loved ones over your spending, or if you find yourself unable to work because of worrying over your debts, these are classic warning signs of trouble.

Is debt changing how you perceive yourself? How others perceive you?

If you are constantly getting down on yourself over your debt, or if you are afraid for people to find out about your spending, these too are warning signs of trouble. Sometimes people with spending problems justify their behavior by telling themselves that they deserve the things they are acquiring because they are better than other people. If you catch yourself in this kind of rationalization, take it as a warning sign.

Do you play fast and loose when it comes to creditors?

If you’ve ever provided false information in order to obtain credit, or made totally unrealistic promises to your creditors, these may indicate a problem with compulsive spending.

Does spending or taking on debt feel better than it ought to?

Sure, everyone enjoys getting something new, and if you really need a loan and it comes through, it’s natural to experience relief. However, if you live for the thrill of spending, or if getting a loan makes you feel like everything is guaranteed to work out no matter what, your relationship to debt may be a poor one.

Does debt affect your health?

If you can’t sleep, if you drink or use drugs to avoid thinking about debt, your spending could have serious, lasting effects on your health, and that’s nothing to gamble with.

Luckily, more and more awareness of this problem is starting to reach the public. Organizations like Debtor’s Anonymous (www.debtorsanonymous.org) are out there to help people dealing with spending addiction.

If you have been struggling with spending addiction problems for years, you may find yourself drowning in credit card debt. If this is the case, keep in mind that bankruptcy can help you take care of your debts for good. Second chances are rare in life, but bankruptcy can provide that for you. If you have a problem, it’s time to take decisive action, and to get your life back on track.

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Published Wednesday, August 5, 2009 @ 10:24 am

You might already know about the problems associated with fraudulent transfers. These are claims brought before the bankruptcy court by the trustee or by creditors which allege that you purposefully transferred property to someone with the intention of keeping it out of the hands of your creditors. If it is determined that you transferred the property with the intent to hinder or defraud a creditor, you could seriously jeopardize your bankruptcy, or worse, face some prison time. Hopefully if you’ve heard about fraudulent transfers, you know enough not to attempt them.

To complicate matters, the law will also look upon a transfer that wasn’t “actually” fraudulent as “constructively” fraudulent if you make a transfer, receive something in exchange, but the something you receive is not reasonably equivalent in value to the item you transfer. You see, sometimes people are really not trying to protect assets for themselves; they simply make a gift that is too generous in the eyes of the bankruptcy court, inappropriate in light of your obligations to your creditors. Making such a transfer will leave you with a diminished estate, meaning unsecured creditors will receive less in your bankruptcy than if the transfer had never occurred. In such a situation, it is the trustee’s obligation to recover the value of the transfer, and distribute this value to your unsecured creditors.

Here are a few examples of potentially innocent or well-intentioned actions that could be regarded as constructively fraudulent by a bankruptcy court. Maybe you want to help a loved one out, so you sell something you own which is worth $10,000.00 for far less, say $5,000.00. While it’s understandable that you want to give your family member a good deal, you could be leaving your loved one exposed. The court might decide that because of your insolvency, your sale was really intended to shield your assets from creditors.
The Trustee could then sue your relative for the difference in value. This is definitely not a situation you want to be in.

Another example is making a large donation or contribution to, for example, a political candidate, in the form of a large purchase of gift, on the eve of the bankruptcy. Here, too, the court will probably go after the beneficiary of your purchase to recover the value of the contribution. In all these examples, you weren’t attempting to save the asset for yourself, or attempting to get something in return in an immediately tangible fashion. However, your action will be frowned upon by the court because it will appear irresponsible given your probable intention to declare bankruptcy in order to rescue yourself from financial peril you were surely aware of.

One possible exception to this rule are good faith donations made to a church. A number of religious organizations worked together to promote the Religious Liberty and Charitable Donation Protection Act, and it was passed in 1998. Under the act, donations you make to your church will not trigger action against the church so long as the contribution was equal to no more than 15 percent of your income during the year preceding bankruptcy. If you consistently contributed in amounts exceeding that 15 percent ceiling, the court may allow those to pass as well. Warning! Don’t take this to mean that you have carte blanche to give away money on the eve of the bankruptcy on the theory that it’s better to give it to anyone just to keep it from your creditors. If the court figures out that such was your intention, your church could get sued.

To avoid these problems in your bankruptcy, it’s very important that you speak with an experienced attorney early in the process. If you have significant assets, chances are they are at least somewhat protected by your state’s exemption laws. This means there’s no chance you’d lose the asset in a bankruptcy. However, once you’ve made the transfer of the asset, you lose your right to claim the exemption.

If you’re thinking about bankruptcy but are worried about losing your possessions, talk to an experienced bankruptcy attorney today. In North Carolina, contact the Law Offices of John T. Orcutt. No charge for your initial consultation, and we have 4 convenient offices to choose from. Call 1-800-899-1414 today.

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Published Tuesday, July 28, 2009 @ 6:21 am

Before the deservedly unpopular 2005 reforms to the Bankruptcy Code, it was rare that an innocent mistake could cause your discharge to be denied or revoked. It used to be that trustees and the courts reserved this harsh measure for those situations where it was clear that a person filing for bankruptcy had engaged in serious, persistent and intentional misbehavior. Now, in the aftermath of the reforms, it is even more important than ever to hire a competent bankruptcy attorney to help you navigate a bankruptcy filing, not just because the reforms made declaring bankruptcy much more complicated, but also because a mistake could cause your discharge to be revoked or denied. And what’s the point of declaring bankruptcy if you don’t get your debts discharged? That bankruptcy isn’t going to help you at all, probably, and it will almost certainly hurt you.

There are several situations you must be on the lookout for to avoid having your discharge denied or revoked. First of all, under the reforms, a prerequisite for receiving the discharge is the completion of a financial management course. This course is one hosted locally in your area and approved by your bankruptcy case trustee. You will only be exempted from completing this course if a good one isn’t available nearby. Although the educational value of these courses is questionable, all debtors must fulfill the requirement or forfeit their discharge.

The bankruptcy trustee can demand a great deal of information from you over the course of your bankruptcy. One of the more onerous demands is the production of your last four years of tax returns. If the Trustee demands the returns and you fail to produce them, your discharge could get dismissed outright. If you’re bothered by this requirement, well, who can blame you? It seems like your tax returns are private financial information that should remain so, even during bankruptcy. There is a little bit of latitude for protecting your privacy: you can opt to send transcripts of the returns (also known as summaries) instead of the full filings; these contain less personal information. Avail yourself of this option by requesting summaries from the IRS.

And we’re not done yet! If you’re filing for bankruptcy under Chapter 13 and you owe child support or alimony, it’s time to get caught up. In order for your debts to be discharged at the end of the process, you must be completely up to date on your support payments. The good news is that if you are behind, the arrears can be caught up in your Chapter 13 plan. Your ongoing payments must continue to be paid over the course of your bankruptcy. It would be a real shame to get to the end of the process, having made all of the required plan payments, only to have a problem because you missed a few support payments along the way. Protect your discharge by paying these on time.

Finally, it should hardly need to be stated that you must tell the truth and avoid fraudulent activity during your filing. Remember that even if your intention isn’t to commit fraud, an innocent mistake could be interpreted as such if the effect is to obscure some part of the process or misrepresent your position in any way.

With all of these potential quagmires, it’s imperative that you consult with an experienced bankruptcy attorney. In North Carolina, contact the Law Offices of John T. Orcutt- helping families since 1985. 1-800-899-1414.

Durham bankruptcy attorney. Raleigh bankruptcy attorney. Wilson bankruptcy attorney. Fayetteville bankruptcy attorney.

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Published Saturday, July 25, 2009 @ 5:35 pm

It shouldn’t take more than a few visits to our blog for you to find a slew of posts about how to prepare for your bankruptcy and manage all the relationships along the way, like those with your attorney and bankruptcy trustee.

Like any relationship, the ones that are forged during a bankruptcy should be built on trust. That is, you need to be upfront with everyone and every entity involved, even your creditors, to ensure that in the end you wind up where you need to be. A large part of building that trust has to do with how you handle the disclosure of your assets. The following point almost deserves to be in all caps, but no one likes to be yelled at, so: never try to hide or transfer assets with the intention of shielding them from creditors.

Okay, now that the lecture is over, it should be noted that sometimes people transfer assets with good intentions. A constructively fraudulent transfer is not an deliberate attempt to hide an asset but is looked down upon by creditors because quite often, the gift or item in question is transferred at a value less than its actual worth. For a simple example, imagine you sold a $25,000 SUV for $15,000 out of simple desperation to raise cash for the bankruptcy. Sure, you now have cash, which is still an asset, but the creditor would have preferred the $25,000 SUV. And you can rest assured, they’ll make a case out of it.

Consider these additional examples of constructively fraudulent transfers:

• Ty Webb gives Lacy Underall $10,000 to help her move from dreary old Manhattan to a high-end suburban country club. His creditors will end up pretty unhappy with Ty’s attempt to secure his girlfriend a spot at the club pool because that money could have been used to pay his debt. Worse yet, he received no real asset in return. As a result, the bankruptcy trustee handling Ty’s case will most likely try to sue Ms. Underall for the money. Since Ty’s asset transfer wasn’t an attempt to hide anything, his bankruptcy will probably go through as planned. But now his girlfriend is involved, and that doesn’t bode well for Ty’s post-bankruptcy dinner plans.
• Al Gore, on the cusp of bankruptcy and in a last-ditch effort to remain relevant, decides to switch political parties and attend an expensive fundraising dinner for the Green Party candidate in the 2012 election. He pays $50,000 to attend. Once he officially files for bankruptcy, the court immediately rules that the party candidate’s election committee needs to relinquish Mr. Gore’s donation to the trustee because it was ruled that the dinner was not equal to $50,000 cash that could be used to pay creditors.

As you can see by the example above, even donations are subject to becoming constructively fraudulent transfers in the eyes of the court. Large donations to churches, schools and other non-profits can all be retrieved by the trustee if they result in the reduction of an asset’s value or are considered an attempt to quickly move money and thus, diminish the trustee’s ability to obtain proper restitution for your debts. There has been some action against this practice, however. In 1998, a contingent of religious organizations successfully lobbied for the Religious Liberty and Charitable Donation Protection Act, which was formulated to protect good-faith monetary gifts of up to 15 percent of a person’s gross income based on the year before filing bankruptcy.

If you’re considering filing for bankruptcy, it’s important to talk to a bankruptcy attorney early to avoid an innocent mistake like the ones described in this post. In North Carolina, call the Law Offices of John T. Orcutt for a free initial consultation. 1-800-899-1414.

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Published Wednesday, July 22, 2009 @ 8:08 am

Liens―a kind of property interest that secures payment on a loan, or the performance of some obligation―are a thorny little issue in bankruptcy cases. Unlike many kind of debts, liens generally (with only a few exceptions) will not be discharged automatically in a bankruptcy the way unsecured debt is. Liens come in many flavors―how about tax liens, mortgage liens, and mechanic’s liens, to name a few― but they generally fall into one of two categories: consensual liens and nonconsensual liens. Consensual liens are themselves split into two categories; one category of consensual liens is generally referred to as a “purchase-money interest,” while the other is known as a “nonpurchase-money security interest.”
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1) Consensual Liens
purchase-money security interests, nonpurchase-money security interest

2) Nonconsensual Liens
Judgment liens, statutory liens, tax liens.

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Ok, there you have it, your daily dose of jargon. Now what does it all mean?!